Suppose we raise 45 million@29c. And the share price falls to 30-31 c after trading resumes.
The market cap will still be more or less same before & after the CR.
The company will have more cash in hand, more outstanding shares and a less enterprise value.
All good for new shareholders but not as good for existing holders. Not happy. See how this big institution squeeze us little guys.
If the funds are being raised for expansion purpose, maybe it will turn out good in the long run. But right now, we existing shareholders are getting a 15% haircut.
Last year cap raise was very predictive. Almost all long term holders more or less knew it was coming, I knew the company needed cash at that time. But I had no idea about this one, I didn't think it was necessary unless there is something else behind........surprise surprise. Simon Jackson is a very smart man. He would well know that the shareholders will not like this CR unless for some very good reasons. Obviously, he must have consulted with large shareholders before making this announcement.
I really don't think he just woke up Friday morning and decided let's do a CR. So the big money has supported it. My problem is the price 29c. If it was say 32-33c......okay. Why such a big discount??? And only to institutional holders. The big money are no fools and if they are backing it, there must be some good reason.
I remember 2-3 years ago, Saracen although wasn't doing spectacular but had a great institutional support. I could never understand at that time so never took a sizeable position. Now I wish I had.
The share price is where the big money want it to be. If they want it lower, lower it goes. If they want higher, higher it goes. I have learned that more so in the last 3-4 months with my SLR and RMS experience.
Look at Gascoyne, raised at 50c and now trading at 60c +. They are still a good two years away to make a dollar.
Very few gold companies are in a position as BDR with huge huge upside, but still trading at chippies level. The one which are Or are in better position than BDR, they are attracting a premium. The institutional big boys know this, hence Van Eck buying, Black Rock buying, recently Black Rock & Van Eck are getting more gold exposure, so they must have a better outlook for Gold.
Anyway the point is regardless of the CR reason, it can be summed up to........
Short term pain, Long term gain.
Waiting anxiously for tomorrow.
All the best
BDR Price at posting:
34.5¢ Sentiment: Buy Disclosure: Held
